Surviving The Advertising Exodus Hotels Cope With Convention Losses

Twelve days ago, Hasbro Inc., the billion-dollar toy manufacturer, had a special announcement from its Rhode Island headquarters.

A new toy line? A hostile takeover? No. It wanted to announce that, because of Florida's new tax on advertising, the company is canceling its national sales meeting in Orlando this fall.

Hasbro is not alone. Kraft Inc., Warner-Lambert Co., RJR Nabisco Inc. and other companies are canceling -- with much fanfare -- meetings and conventions in Florida to protest the state's decision to extend the 5 percent sales tax to previously exempt services, especially advertising.

Hasbro's pullout cost the Stouffer Orlando Resort hotel and the Orlando Marriott on International Drive 4,200 room-nights over three weeks.

It cost Hasbro, too -- by pulling out just three months before the convention, the company forfeited an undisclosed amount it had deposited with the Stouffer.

Cancellations in protest of the tax have been getting a lot of attention in the past few weeks, in part because of the types of businesses involved, said Charlie Johnson, an analyst with Laventhol & Horwath, an accounting firm that does consulting work for the hotel industry.

Some of the companies that are canceling meetings are adept at advertising and marketing and are run by people who make their living by publicizing things.

''What we're seeing is a well-publicized blitz,'' Johnson said. ''They're all advertising-related companies. I personally think they're making a mountain out of a molehill.''

Rueben Aguilar, vice president for communications at the Greater Miami Convention and Visitors Bureau, agreed, saying he thinks the publicity probably is aimed at other states, not Florida.

''One of the things we have been unfortunate in is that Florida is the first of many states that have been considering this to enact it,'' he said. ''I think there's a feeling that how we go, then others will go.''

Determining how much convention business the state is losing is not easy. Major conventions usually are booked through county or city convention and visitors bureaus, but major hotels and resorts also recruit conventions and smaller but more frequent business meetings on their own.

Hotel operators who are quick to decry the lost revenue are just as quick to refuse to divulge the volume or value of their cancellations, either in money lost or as a percentage of their total revenue. Tom Waits, the executive director of the Florida Hotel-Motel Association, said his group has been able to overcome that fear of losing a competitive edge only by promising anonymity to individual properties that provide figures.

Since the tax was approved April 23, the Orlando/Orange County Convention and Visitors Bureau said, at least 15 organizations and companies that would have used 20,000 room-nights between 1987 and 1991 have announced that, in protest of the new tax, they will not be coming.

Statewide, the Florida Hotel-Motel Association says, its members report that they will lose more than $16 million in room charges, meeting-space rentals, meals and other charges from 62,245 canceled room-nights between now and 1992, with nearly half of that involving conventions and meetings booked and signed for 1988. While losing 62,245 room-nights over four years may sound like a lot, it is actually equivalent to having a 171-room hotel empty for a year. There are more than 60,000 hotel rooms in the Orlando area.

Losing more than $16 million in business may sound bad, but hotel operators and analysts acknowledge that the problem is probably short-term and that the loss probably will be recouped within two years. They also say that the boycotting companies may have a change of heart.

Convention salespeople say that there is no new strategy they can adopt except to work harder and go after other segments of the convention market, such as less-lucrative associations, to compensate for the drop in corporate business.

The tax makes conventions in Florida more expensive than before because the services of musicians who play at banquets, temporary workers, parking attendants and other support personnel now will cost 5 percent more.

Fred Corrigan, a spokesman for the Orlando/Orange County Convention and Visitors Bureau, said the calls his bureau has received have complained more about the tax on advertising than on increased costs of running a convention in Florida. The complaints have been primarily from advertising and media- related companies and groups protesting the tax on advertising, he said.

''I think the companies and associations are going to eventually discover that this is just an additional cost of doing business,'' Aguilar said. ''A lot of people were thinking, 'Katie, bar the bureau door!' But it ain't happened. We're still in business.''

Others in the convention industry and those who follow it agree that, while the tax on services will increase the cost of putting on a convention in Florida, the increase is not going to make Florida's prices prohibitive.